It has been a wet winter in Paris and the River Seine is rising fast: 2 cm, or about an inch, every hour. This will bring the Seine to a little over six metres, as measured by the Austerlitz monitoring station or, as Parisians will tell you, up to the thighs of the Le Zouave statue on the Pont de l’Alma (our photo). That’s how high it got in 2016. Already, several major roadways along the river banks have been flooded over, while the city authorities are issuing warnings, not just in Paris, but in several French cities. How bad can it get?

The 2016 flood caused more than €1billion worth of insured damage, two deaths, and severe disruptions to the transport system. Well over 17,000 people were forced to leave their homes. While upper parts of the river catchment suffered significant damage, Paris itself was spared. If the water had gone 25 cm or 10 inches higher, it would have been a large-scale crisis, authorities said. There is no room for complacency, and even if the peak this time is officially expected to be reached in the next few days, everyone is monitoring the rainfall closely.

Before 2016, floods in Paris occurred on average every 20 years. The Seine has not significantly overflown since 1955, the high-water mark being the great flood of 1910. At 8.6 m on the Austerlitz scale, the river turned Paris into Venice that winter. In its 2014 Review of Risk Management Policies: Resilience to Major Floods in the Seine Basin, the OECD estimated that a flood of the same magnitude today would cost France between €3 and €30 billion.

The OECD made 14 recommendations on how the Paris region could boost flood resilience and emergency preparedness in the review. More than half of these have been put in place says the follow-up report, released this week, but a better integration of flood risks into urban policies is still being held up by governance and financing difficulties.

Decentralisation and the consolidation of greater Paris into the Grand Paris Metropolitan Authority can open up co-operation on flood management in new administrative structures. The Grand Paris Metropolitan Authority should work closely with local authorities in the Seine basin to define a global, long-term flood strategy for the region.

A flood-resilience framework would give coherence to initiatives such as a charter to design resilient neighbourhoods and a serious rethink of areas within the flood plain that are currently earmarked for densification. Priority could be given to upgrading protective dykes and quay walls along the river as well as critical infrastructure vulnerable to flooding. It could spur storm preparedness for businesses, even small ones, so that they can keep going even as the waters rise. Examples from the reconstruction of a resilient New Orleans after Hurricane Katrina, or New York after Sandy, could inspire Paris to build up its own resilience before disaster hits.

All of this requires money of course and this week’s report finds that available flood prevention funding is still not enough. For the past 20 years, there has been talk of developing flood water storage–marshlands and an artificial lake–at La Bassée, upstream from Paris. It would be able to take in 55 million cubic metres of water but costs an estimated €600 million. To fund this and other flood resilience projects, the government needs to develop a more ambitious, long-term and holistic strategy co-ordinated with anybody who benefits from flood protection, whether it be network operators, enterprises or local authorities. Even individual citizens in what is one of the richest regions in Europe could do their part by paying a flood prevention tax. Local authorities could explore cutting-edge financial mechanisms to fund initiatives, such as green bonds.

In 2024, Paris will host the Olympic Games. With its ambition to produce 55% less carbon emissions than the 2012 London Olympics, Paris hopes to stage the greenest games in history. If it manages to incorporate flood risk into its planning now, the Olympic Games will be high and dry.

Ever hear of triple-bottom line accounting? This is what businesses use to go beyond the usual financial balance sheet to ensure their accounts reflect environmentally and socially responsible profits and loss. Shareholders and clients increasingly want companies to be clean and responsible in their business practices, to such an extent that it can affect their stock value.

But what about government? Shouldn’t public finances also follow such quality criteria so that we can hold our politicians to account and ensure our tax money is taking care of the environment?

In our view, budgeting is not a “neutral” reporting exercise, but one of the most effective ways of making sure that public money is put to work properly, and that policies are actually helping governments to achieve important goals, like fighting climate change and cutting pollution, for instance.

“Green budgeting” aims to use the budget–taxes, spending and policy co-ordination–to assess and promote the alignment that is essential to meet environmental goals. For example, green budgeting shows financial outlays that have positive climate change impacts, and highlights tax policy choices that must be confronted as fuel is “decarbonised”­, whittling away a major source of government revenues.

Many large private corporations employ the triple-line accounting championed by the likes of the Global Reporting Initiative, an independent organisation, to measure overall company performance according to not only traditional profit and loss, but social responsibility to people, and environmental performance as well. But the public sector has been slow to do the same. This will have to change. The climate change targets we have set in the Paris Agreement, Aichi Biodiversity Targets and the United Nations’ Sustainable Development Goals require that governments know what portion of their budgets is moving their countries towards reaching these targets and what portion is hindering it, and to craft their policies accordingly.

With the backing of France and Mexico, OECD Secretary-General Angel Gurría announced the green budgeting initiative at the One Planet Summit in Paris in December 2017, along with a call for meaningful carbon pricing.

French president Emmanuel Macron welcomed the initiative enthusiastically: “We are launching the “Paris Collaborative on Green Budgeting” within the framework of our zero-emission objective,” he said at the global climate financing summit. “Analysis of the budgets of OECD countries furthers transparency, and I thank Angel Gurría for his contribution to this framework. The work of the OECD will enable budget presentations launched by a group of pilot countries. Obviously, we will be contributing with presentations that show how the budget each year is distributed according to climate objectives.”

The OECD has brought together a cross-disciplinary group of environmental, tax, budget and fiscal affairs experts who will partner with countries to help them assess and improve their budgets and fiscal policies for climate resilience. Among other things, green accounting looks at how subsidies that are harmful to biodiversity or which push the planet’s carbon emissions output compare with resources the government puts in these two areas. The Collaborative will analyse how coherent fiscal policies are with developing low-emissions, sustainable strategies. And, taking inspiration from the OECD’s work on “gender budgeting”­­, which determines how budgets impact gender equality, it will promote environmentally-sensible budgeting.

The OECD will work with countries to set a new global agenda for green budgeting with agreed-upon definitions, and common methods, guidelines and tools to bring about sustainable public finance flows. Tools include those that track the impacts of decarbonisation and carbon pricing on fossil fuel use and tax revenues in each country, and voluntary “green budget statements” to show the environmental credentials of the annual budget.

Companies adhere to triple-line accounting because it shows the true cost of doing business. Likewise, by knowing the environmental costs and benefits incurred in serving its citizens thanks to green budgeting, governments will be better able to raise the planet’s bottom line.

For more on the Global Reporting Initiative today, see www.globalreporting.org and read Massie Robert Kinloch (2001), “Reporting on sustainability: A global initiative”, OECD Observer No 226/227, Summer, http://oe.cd/wbO

Air pollution in Delhi has been so bad this November that the Indian Medical Association declared a public health emergency. At more than 25 times the WHO recommended level, the pollution peak in India’s capital has been extraordinary. This is becoming increasingly common in Delhi and other cities around the world due to emissions from biomass burning, coal fire plants, agriculture and especially agricultural burning and diesel transport.

Dangerously high concentration levels of air pollutants, and especially of fine particles, cause an increase in asthma attacks and lung conditions. Alarmingly, air pollution is tied to longer-term chronic health problems, such as respiratory and heart diseases, premature and underweight babies, allergies and increasing incidences of cancer. All these lead to a sizable–and increasing–number of premature deaths and illnesses. According to the latest Global Burden of Disease study published in The Lancet, outdoor air pollution caused more than a million premature deaths in India in 2016, whose cost, according to OECD estimates, amounts to more than USD 800 billion. But that is not all: there is a range of other social costs associated with air pollution, such as costs related to pain and suffering, and costs to biodiversity and ecosystems.

Air pollution also exacts costs on the economy with additional health expenditures as well as lost work days, which affect labour productivity. And, agricultural productivity can also be severely affected by air pollution as high ozone concentrations and slow plant growth reduce crop yields with important economic consequences.

Strong policy action must be taken. According to projections by the OECD the population-weighted average concentrations of PM2.5–the finest, most harmful particles–are projected to increase threefold by 2060 if ambitious action is not taken. Premature deaths from being exposed to pollution are projected to increase up to five times. This is a staggering number, and represents up to a third of global projected deaths in 2060. Incidences of illness will similarly worsen. Lost working days will increase significantly, to levels equivalent to more than six million people missing work on a daily basis by 2060.

Market costs to the Indian economy are projected to increase eightfold to over USD 280 billion by 2060–this is more than 7% of India’s current GDP (in 2005 Purchasing Power Parities exchange rates). The social costs from mortality due to air pollution would increase 15 to 33 times, as both the number of premature deaths and the value per death increase.

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Air pollution is a global local problem: it is a global phenomenon with local environmental and human health impacts, particularly in high-density urban areas. As such, public policies to reduce emissions must be undertaken both at the national and local levels. International co-operation on limiting concentrations and implementing the best emission reduction technologies is essential for countries to put into motion solutions and policy tools to bring down air pollution. Urban planning and transport have a central role to play here.

Air pollution is also strongly linked to another global problem: climate change. This week at the 23rd Conference of the Parties to the UNFCCC (COP23) in Bonn, policymakers face decisions on their level of commitment in combatting climate change. Taking a closer look at its link with air pollution could provide impetus for immediate policy action. It would prevent higher numbers of premature deaths, and have a positive impact on the economy too.

Pricing carbon is one of the surest policy means we know for curbing greenhouse gas emissions and meeting the targets of the Paris Climate Agreement agreed in 2015. Has there been any progress with its implementation since then? Not enough, is the verdict of some of the world’s leading experts.

Some 85% of global emissions are currently not priced, according to a report issued in May 2017 by a High-Level Commission on Carbon Prices, co-chaired by Joseph Stiglitz and Lord Nicholas Stern, both respected figureheads in the fight against climate change. Moreover, about three quarters of the emissions covered by a carbon price are priced below USD 10 per tonne of CO2 (tCO2).

That price is much too low, since according to the report, if we are to achieve the Paris temperature target the explicit carbon-price level should be at least USD 40-80/tCO2 by 2020 and USD 50-100/tCO2 by 2030.

One gap in these numbers is that they do not take into account excise taxes on the likes of transport fuel, heating and energy use more widely, that have virtually the same behavioural impacts as more narrowly defined carbon taxes, and should therefore also lead to reduced emissions.

If these rather commonplace excise taxes on energy use are added into the mix, we can form a broader view of how carbon emissions are currently being priced. To gauge this, we have developed “effective carbon rates”, which are made up of all specific taxes on energy use, carbon taxes, and prices of tradable emission permits. This database, which we presented in our 2016 OECD report on Effective Carbon Rates , calculates effective carbon rates for 41 OECD and G20 countries, covering 80% of global energy use and the associated carbon emissions.

In one sense, the picture that effective carbon rates depict is a little brighter than that presented by Messrs Stiglitz and Stern, as it includes a broader range of taxes, so higher rates. In another and more fundamental sense, the picture actually is a little darker, as effective carbon rates show the enormous size of the challenge we face in battling down greenhouse gas emissions, even when taking a broader view of carbon pricing.

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Indeed, according to our database, 60% of emissions from energy use in the 41 countries are currently not priced (compared with 85% in the commission’s report). However, some 78% of emissions are priced at less that EUR 10/tCO2, which is no less discouraging. So while our more comprehensive estimates indicate that carbon pricing is more widespread than the High Level Commission’s report suggests, they nevertheless reinforce the Commission’s main point that carbon pricing still only plays a very limited role, and that we are a far cry from what is required to reach the Paris Agreement objectives.

The High Level Commission estimates that carbon prices should range between EUR 40 and EUR 80/tCO2 in 2020 for the Paris Agreement targets to have a chance of being met. Currently, effective carbon rates are below EUR 40/tCO2 for 93% of emissions, and are below EUR 80/tCO2 for 95% of emissions. Omitting road transport (where excise taxes are relatively high) from the calculation increases these shares to 99%.

In short, almost no emissions from energy use are priced at levels required to keep global temperature increases below 2 degrees Celsius limit, beyond which climate change could spin out of control. The world’s leaders understood the gravity of this prospect by signing up to the Paris Climate Agreement. It is now critical that they take the policy action needed to meet those goals, and that means increasing carbon prices now.

The consequences of degradation of environmental quality as well as the consequences of environmental policies are typically unevenly distributed. In general, poorer countries and lower income households are more severely affected by environmental degradation and at the same time have less capacity to adapt.

Outdoor air pollution kills more than 3.5 million people a year globally (WHO, 2012). Poor health caused by air pollution is especially problematic for children and the elderly in major emerging economies. Between 2005 and 2010, the number of premature deaths in China and India increased by 5 and 10 percent, respectively. Road transport is a significant source of air pollutant emissions, and rapid growth in traffic has outpaced the adoption of tighter regulations, leading to increased vulnerability of the urban population. The welfare costs of road transport alone are projected to amount to around USD 1.7 trillion in the OECD countries, USD 1.4 trillion in China and USD 0.5 trillion in India (OECD, 2014).

Despite the role of international trade in smoothing the economic costs of environmental feedbacks across regions, OECD estimates suggest that climate change impacts will be substantially more severe in most countries in Africa and Asia than in most of Europe and America. Despite large regional differences, market consequences from climate change are projected to be negative in almost all regions, and the economic consequences of greenhouse gas emissions are unavoidable and enduring for a century or more. Changes in crop yields and in labour productivity are projected to affect the economy most strongly, each amounting to several percent of GDP loss in the most vulnerable regions. Moreover, there are significant non-market impacts as well as risks of crossing essential tipping points and moving towards a climate system with the potential for very severe impacts on regional economies over the longer term.

In OECD countries the sectoral shifts in employment, resulting from global climate mitigation policies, are substantially larger than the effect on overall employment. Moreover as skill requirements differ across sectors, skills mismatches could appear thereby significantly increasing the transition costs associated with these policies, and increasing inequality between skilled and unskilled workers.

Mitigation and adaptation policies can reduce the negative impacts of climate change globally, yet the costs of these policies will not be borne by all sectors and regions proportionally to their expected benefits, that is they are unequally distributed. These differential impacts pose key political economy challenges to policy reform.

Distributional aspects are often used as an argument against implementing or reforming environmental policies. A key economic question then becomes whether policy reforms can be designed in such a way that they are not regressive. For instance, OECD work finds large differences in regressiveness of different energy taxes between energy carriers and between regions in 21 OECD countries.

The case of Indonesia is particularly illustrative: the country is facing severe environmental challenges, not least from climate change and air pollution, and until very recently had significant subsidies for fossil fuel consumption. As part of the NAEC initiative, an innovative analytical framework was developed to simultaneously assess the macroeconomic, environmental and distributional consequences of energy subsidy reforms in Indonesia. The study found that if Indonesia were to remove its fossil fuel and electricity consumption subsidies, it could record real GDP gains of around half a percent in 2020, while also substantially reducing a range of energy-related emissions. The simulations showed that replacing the fuel subsidies with cash transfers, and to a lesser extent food subsidies, can make reform more attractive for poorer households and reduce poverty. Food subsidies tend to create other inefficiencies, however. Mechanisms that compensate households via payments proportional to labour income were, on the contrary, found to be more beneficial to middle and higher income households and increase poverty. This is because households with informal labour earnings, which are not eligible for these payments, are more represented among the poor.

Indonesia has reformed its subsidies to fossil fuel consumption providing real world evidence of what policy reform can achieve. The conclusion from OECD work – confirmed in practice by the way Indonesia went about its reforms – is that the design of any redistribution scheme will be crucial in determining the overall distributional performance of the reform. Well-designed policies with adequate accompanying measures can ensure a triple win on economic efficiency, environmental effectiveness and reduced inequality. The right policy mix is very sensitive to local circumstances, but the OECD’s analysis confirms that inequality concerns do not have to hamper environmental policy.

Both environmental pressures and environmental policies clearly affect different countries and different groups within them unequally. These differences are essential to take into account in the design of more targeted and more equitable policies, but in order to do so measurement and quantification of these differential effects is an important first step. The tools and frameworks developed in this area particularly as part of the NAEC exercise are an important methodological contribution in this regard.

We could spend World Environment Day warning of the doom and gloom of future Earth, but considering how much we’ve done that already, that’s not going to get us very far as we approach this year’s COP21 in Paris. Instead, we’re going to give you a taste on what we do here at the OECD headquarters to help save the environment, taking our own medicine on what we prescribe to governments.

But what can just one organisation do? Well, considering the fact that the building sector contributes to 30% of annual global greenhouse gas emissions and consumes 40% of all world energy, we feel we can make an impact. With 11 buildings and almost 3000 employees at our Paris headquarters, we decided in 2010 to start monitoring our own progress. From conserving precious water to installing beehives in our gardens, we hope you’ll feel inspired from the following initiatives by our [email protected] programme.

Water: that scarce life source that’s running out fast. With only 1% of the world’s fresh water available for human use, we need to conserve every drop. We’ve installed drinking water fountains throughout our headquarters’ meeting rooms to save up to 200,000 bottles of water annually. We’ve put aerators on our bathroom and kitchen faucets, which reduce water consumption by 20%. We’ve changed the way we take care of our OECD gardens to conserve water. In 2015, we’re looking forward to installing a rainwater harvesting system. We’ve got a long way to go, but we’re proud to say that we now use water 27% more efficiently than in 2010.

An environmentally-certified building is a happy building. Not to mention that our offices are starting to resemble what you imagined “the future” to be (green technology is not only efficient—it’s really cool to play with). We’ve achieved High Environmental Quality certification for four of our buildings—we’re working on getting the rest up to par.

This is our biggest category for improvement—75% of the OECD’s greenhouse gas emissions in 2014 came from official air travel. We’ve come up with an internal carbon price for each OECD directorate based on the kilometres their staff travelled by plane. This carbon pricing system gives us the funds to look into other green initiatives: in 2014, we bought monitoring systems to display real-time water and energy consumptions to our employees, and (one of our favourites) we introduced two beehives into our gardens. In 2013, we used these carbon pricing funds to develop our remote conferencing technologies, which in turn minimise the need to travel by plane to meetings in distant lands.

We might have mentioned our beehives once or twice already. Can’t you tell we’re enthusiastic? With the bee population rapidly declining over the past few decades, we’re doing our part to save the species that pollinates 90% of the world’s nutrition.

Our caterers use sustainable and local materials for our lunches when possible, and we’ll never see endangered sea foods in the soup du jour. Cleaning products used by our contractors are also natural, biodegradable, and environmentally-certified.

We installed a printing management software that tracks how much each employee prints. That, combined with increased use of electronic and IT equipment, has resulted in 33% less paper use than in 2011.

We’ve reduced our greenhouse gas emissions by 6% since 2010. It’s a small step towards saving our environment, but just imagine if every organisation adopted small and simple initiatives to drastically reduce greenhouse gas emissions and better manage water and energy. You can view more of our collective progress since 2010 in the infographic below:

This World Environment Day, we want to inspire. Whether you come from a citizen household or government bureau, we encourage you to think about your role for the livelihood of future generations. Don’t know where to start? Check out our #WhatCanIDo tips on Twitter for easy ways to lower your carbon footprint.

As for us, we’re aiming to save our planet not only through [email protected], but through sound policies to governments who can make real change.

Useful links

For more on the OECD’s environmental policy recommendations, visit our webpage here.

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Today’s post by James Greyson, Head of BlindSpot Think Tank is in response to Naazia Ebrahim’s recent article on greening household behaviour. We asked James to expand on his argument that “System change policy would design waste out of economics”.

“And above all, watch with glittering eyes the whole world around you because the greatest secrets are always hidden in the most unlikely places.” – Roald Dahl

This line from a story by the imaginative genius Roald Dahl was published after his death in 1990. Today these words still sound like handy advice for those of us watching the world and looking for places where change can shift paradigms. Dahl hints at a key insight for solving intractable global problems, that our way of looking determines whether we find what we’re looking for. Since we’ve collectively not found it, why not look for help in an unlikely place such as a children’s story?

Our world and its problems should have been watched for long enough. Inequality, debt, financial instability, corruption, conflict, ecosystem damage, waste and poverty have been seen through history. These big problems have been watched by problem-solving professionals since at least the 1972 UN Stockholm Conference. Despite all efforts since then the risks that the conference declaration warned about, such as “massive and irreversible harm to the earthly environment on which our life and well-being depend”, just grow and grow. After all this time there are still no solutions in place to avoid that unpredictable moment of irreversibility when any global problem overtakes any hope of recovery. Even now, this moment could be avoidable so we should be seeking new possibilities.

Roald Dahl hints at the necessary imaginative leap. If millions of professionals can work for decades on global problems without actually solving them then we might be missing something. Dahl’s advice to look in unusual places can be read as an invitation to not only look where we expect to find solutions. Solutions on the scale and speed that are needed will probably not be found where everyone has been looking already, but within our collective blindspots. Looking for what we’re missing, especially when we’re missing something big, is itself missing from global problem-solving work. Are blindspots too embarrassing for professionals and organisations supposed to have all the answers? Or are we just a bit stuck doing what we’re doing?

The search for solutions in likely places is not just habit, it’s also a complex system behaviour. This is how paradigms self-reinforce, by hiding the possibility of diametrically different paradigms. Anything too radically different gets filtered out. The space for technical and policy solutions is shaped by the current paradigm rather than by the need to replace the current paradigm. For example, the opportunity of economics that prevents waste, rather than causing it, is overlooked within a system that looks at waste management primarily as a question of rubbish disposal. Incineration for example is considered by the OECD as a component of waste minimisation, rather than a way to convert solid waste into atmospheric wastes. This perpetuates the linear waste-making economy.

Roald Dahl offered a pointer on how to search where solutions seem unlikely. Watching the whole world around us might mean looking at whole system behaviour. We can follow the trail from tangible problems, such as climate impacts or designed-to-fail products, to the systemic problems, such as economies set up to keep losing resources as wastes in ecosystems. We can identify new paradigms for the system, such as circular economy, where used resources end up again as new resources. Then we can make policy to quickly switch the paradigm world-wide, for example by insuring the waste-risk of products. Then the new paradigm can self-organise everything else, phasing out waste from products and lifestyles everywhere.

Watching the whole world is the alternative to the default ways of coping with complexity and change – reductionism and denial. Denial gives licence not to see any problems that require change. Reductionism gives licence to consider any selected subsystems of the world and as much change as seems feasible (which is never enough). Watching the whole world gives licence to look across patterns of global complexity and make sure the necessary changes are feasible. Reductionism allows the problems to grow, ironically making more reductionism seem like the only way to make progress. The whole system viewpoint offers the opportunity to discuss, define and implement ‘the greatest secrets’ of policy solutions for system change.

How would system change policy work in practice? We could rely less on change within systems, such as all the initiatives that try to agree and enforce percentage improvements in problem symptoms like emissions or ecosystem loss. We could take more care to define system paradigms: what are the unintended design features that allow the problems to persist? The most common proposal for a system change, to measure progress beyond GDP, may turn out to be a blindspot since prevailing paradigms seek growth in ways that also undermine growth. The OECD have shown for example that inequality hurts growth. New paradigms that phase out society’s dependence on causing global problems would be growth bonanzas. So politicians wedded to growth should be shown system change policies as a way to get growth, rather than be told to give up on it.

Dahl’s advice to watch with glittering eyes reminds us that civilisation need not continue to undermine itself. As professionals we need not continue to struggle with fragments of global problems only to see things worsen overall. The complexity and interconnectedness of the world’s systems can be harnessed to solve problems they’ve previously caused. We can be curious and excited about finding hidden opportunities for systemic change that not only minimise damage but also reverse historical damage. By embracing Roald Dahl’s imaginative legacy we can edit out the big risks to our future and add amazing new chapters to our shared story.

What do you think? How best to organise system change policy to reverse persistent global problems? Add your comments below or let me know via Twitter @blindspotting.